Value
6.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.3 |
| P/S | 8.4 |
| EV/EBITDA | 6.0 |
| Fwd P/E | 7.4 |
| PEG | 4.6 |
- ▸Forward P/E: 16.7x
- ▸PEG: 1.87
OTTR · Why this verdict
Why Otter Tail (OTTR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Otter Tail has broken out technically with a golden cross and all moving averages in alignment, but analyst price targets have already been reached, the stock sits 3.8% from its 52-week high, and high short interest of 18% creates a squeeze risk that could accelerate either a sharp move up or a reversal.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Otter Tail completed a golden cross with the stock above all key moving averages, RSI at 52 with bullish MACD, and rising on-balance volume — the strongest technical alignment in this dataset. V9 | Price holds above the 200-day moving average and the stock stays above $85 for at least 3 consecutive months. | →Stable |
| CounterThe stock is 3.8% from its 52-week high with analyst targets already reached; late-cycle breakouts in small-cap industrials frequently reverse once resistance is hit at recent highs. | ||
Short interest stands at 18% of float with a short squeeze quality score of 7.5, creating the potential for a rapid forced covering event if prices advance through technical resistance. Risk breakdown | Short interest falls below 12% within 6 months as short sellers cover, contributing to price appreciation. | →Stable |
| CounterHigh short interest often reflects informed bearish research on fundamentals; the short position at 18% may reflect structural concerns about the Coyote Station coal counterparty that are not yet visible in earnings. | ||
While Piotroski F-Score is a perfect 9 out of 9, free cash flow is negative 26% relative to net income, signaling that reported earnings are materially outpacing actual cash generation. Quality breakdown | Free cash flow as a percentage of net income improves to above 50% within 4 reporting periods as capital expenditures normalize. | →Stable |
| CounterHeavy capital investment periods at utilities frequently suppress near-term free cash flow; the negative conversion may reflect rate-base expansion rather than earnings quality decay. | ||
Analyst earnings estimates have declined 37.3% over the past 30 days, the steepest downward revision in the dataset, despite the recent earnings beat, suggesting analysts expect conditions to worsen. Catalyst breakdown | Consensus earnings estimates stabilize or return to positive revision territory within 2 quarters. | →Stable |
| CounterLarge estimate revisions can overshoot in both directions; the 37.3% decline may already be fully priced in after the most recent quarter's 21.8% earnings beat. | ||
Otter Tail completed a golden cross with the stock above all key moving averages, RSI at 52 with bullish MACD, and rising on-balance volume — the strongest technical alignment in this dataset.
→StableV9
- Expectation
- Price holds above the 200-day moving average and the stock stays above $85 for at least 3 consecutive months.
CounterThe stock is 3.8% from its 52-week high with analyst targets already reached; late-cycle breakouts in small-cap industrials frequently reverse once resistance is hit at recent highs.
Short interest stands at 18% of float with a short squeeze quality score of 7.5, creating the potential for a rapid forced covering event if prices advance through technical resistance.
→StableRisk breakdown
- Expectation
- Short interest falls below 12% within 6 months as short sellers cover, contributing to price appreciation.
CounterHigh short interest often reflects informed bearish research on fundamentals; the short position at 18% may reflect structural concerns about the Coyote Station coal counterparty that are not yet visible in earnings.
While Piotroski F-Score is a perfect 9 out of 9, free cash flow is negative 26% relative to net income, signaling that reported earnings are materially outpacing actual cash generation.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income improves to above 50% within 4 reporting periods as capital expenditures normalize.
CounterHeavy capital investment periods at utilities frequently suppress near-term free cash flow; the negative conversion may reflect rate-base expansion rather than earnings quality decay.
Analyst earnings estimates have declined 37.3% over the past 30 days, the steepest downward revision in the dataset, despite the recent earnings beat, suggesting analysts expect conditions to worsen.
→StableCatalyst breakdown
- Expectation
- Consensus earnings estimates stabilize or return to positive revision territory within 2 quarters.
CounterLarge estimate revisions can overshoot in both directions; the 37.3% decline may already be fully priced in after the most recent quarter's 21.8% earnings beat.
Per-dimension breakdown
Quality
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.2 |
| ROA | 3.7 |
| Gross margin | 4.6 |
| Op margin | 9.9 |
| Net margin | 10.0 |
| Current ratio | 7.1 |
| FCF quality | 0.0 |
| Moat | 5.8 |
| Piotroski F | 10.0 |
- ▸Strong margins: 21%
- ▸Earnings quality RED FLAG: -26% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
3.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.2 |
| EPS growth | 3.4 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 8.5 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.2 |
| erm sentiment | 0.0 |
- ▸Estimates falling as sentiment proxy (-37.3%)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.6 |
| quality rank | 6.7 |
| growth rank | 5.6 |
- ▸Best-in-class margins
Technical
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.8 |
| support resistance | 2.7 |
| 52w position | 9.4 |
Risk (lower is worse)
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.0 |
| days to cover | 0.0 |
| volatility | 7.4 |
| put call | 10.0 |
| implied vol | 7.6 |
| max pain risk | 7.0 |
| beta | 10.0 |
| debt equity | 7.2 |
- ▸Short squeeze setup: 18% short, quality 7.5
- ▸Concentration risks: 1 HIGH, 3 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 1.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 5.6 |
| dividend safety | 6.0 |
- ▸Estimates down -37.3% (30d)
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 248.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:39d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.9=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.92
Upside
-13.6%
Downside
7.1%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 61, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $3.7B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.9=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.92 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.2, Value at 6.6, and Momentum at 6.5; the weakest are Growth at 3.3, Sentiment at 3.7, and Catalyst at 4.2. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.92 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Otter Tail completed a golden cross with the stock above all key moving averages, RSI at 52 with bullish MACD, and rising on-balance volume — the strongest technical alignment in this dataset.
Trip ifPrice drops below the 200-day moving average and stays below it for more than 20 trading days.
- P2Short interest stands at 18% of float with a short squeeze quality score of 7.5, creating the potential for a rapid forced covering event if prices advance through technical resistance.
Trip ifShort interest rises above 22% of float.
- P3While Piotroski F-Score is a perfect 9 out of 9, free cash flow is negative 26% relative to net income, signaling that reported earnings are materially outpacing actual cash generation.
Trip ifFree cash flow remains below negative 40% of net income for 2 consecutive quarters.
- P4Analyst earnings estimates have declined 37.3% over the past 30 days, the steepest downward revision in the dataset, despite the recent earnings beat, suggesting analysts expect conditions to worsen.
Trip ifConsensus earnings estimates decline by more than 50% over any 60-day rolling period.